Profitability the key challenge for New Zealand wine

Profitability the key challenge for New Zealand wine

New Zealand wine faces consolidation as it wrestles with the global impact of exchange rates and a growing vintage size.

The annual report of New Zealand Winegrowers (NZW), published late last month, leaves no doubt about  the “difficult times” the industry is working through. Yet, demand for the country’s wine continues to rise, for both white and red. 

Philip Gregan, NZW CEO is quite frank that profitability, rather than consumer demand, is the problem. “The sale price is the issue’ he told just-drinks. 

“What we have learned from 2008 and 2009 is that the industry cropped wine at a level it should not have, and this reflected in both quality, volume and the price. But 2010 saw that surplus disappear.”

 Some industry observers estimate that at least 14 wineries have gone into liquidation over the past couple of years. Gregan said: “Probably three times that number are just pulling their head in, taking their brand off the market and in some cases going back to grape selling. Such rationalisation is important for the New Zealand wine industry.”

Last week, in a sign that consolidation is picking up speed in the sector, Yealands Estate announced that it is to take a controlling stake in a company formed via a merger with neighbouring wine group Ager Sectus Wine Estates